For context, I wonder how many islanders are aware that in February 2026, the UK borrowed £14.3bn, and of that, £13bn was to service interest on the national debt? On top of which, the UK now pays a higher fee for that borrowing on international markets than Greece or Morocco. Taxation in the UK is now at the same level as it was shortly after the end of the Second World War when there was rationing and the need to rebuild a shattered, war-time economy. The UK is spending more on debt interest than it is on education. In short, the UK is potentially headed towards a repeat of the mid-1970s when it had to go cap in hand to the IMF for a bail-out.
If we want to talk about intergenerational inequity, this is what future generations in the UK are going to inherit. It is not only entirely unsustainable, it is immoral, and Guernsey should ensure we do not end up anywhere near this level of financial mismanagement. This is pertinent now because our own local States will debate something called the capital portfolio this month and it is doing so (again) before we have clarity on whether there are going to be any changes to taxation. We have already – necessarily – had to have the 2026 Budget agreed and the Government Work Plan – unnecessarily – agreed before we have any clarity about where (or whether) the money will exist to pay for it all.
We are told that a more fulsome update on the capital portfolio will be brought back by July, which is just as well, since there is scant detail in this month’s policy letter about the costs of various delivery or pipeline projects. That said, it does seek the Assembly’s approval to carry on regardless, presumably on the assumption that from an overall perspective (and excluding two additional, but separate requests from STSB for some £17m. in total, for which there isn’t yet any detail), it is estimated that the overall portfolio is only £1.3m. beyond the far more detailed policy letter agreed in February 2025. Instead, the policy letter focuses on a new approach to planning for capital projects.
If that is actually the main reason P&R wants the Assembly’s approval, it is entirely unnecessary to get them to commit to something rapidly approaching half a billion pounds of future expenditure – essentially blind – over what our available finances are likely to look like come the summer. At least the 2025 policy letter detailed not just the costs pertaining to each of these projects, it also indicated the impact on our reserves of pursuing it without any increases in revenues which depressingly, meant those reserves were gone by 2032.
With the local mood flagging up considerable reluctance to further increases in taxation, and much being made of the alternative – that of government ‘savings’ (with no clear picture of how that could possibly knock as much as £100m. from our annual expenditure) – no matter how ‘essential’ these capital projects have been deemed hitherto, should we really be simply rubber-stamping that they continue? Nine months on, many deputies should now have had revealed to them what is actually behind the curtain on government finances, so should they meekly go along with this without questioning whether we should still be piling unaffordable fuel into the bunkers of the good ship Guernsey as a large iceberg is patently visible on the horizon?
The chief minister, in a recent Guernsey Press article, graciously referred to my ‘eloquent warning of impending catastrophe’ last term. While this never did take on quite the theatrics of Private Frazer in Dad’s Army (‘We’re doomed, I tell ye’), I do have Scottish parentage in common with him. But that was not why I regularly tried to bring the stark realities of our finances to the Assembly’s attention – and still do.
These realities are indisputable in my opinion, but many people choose to ignore the writing on the wall, either through denial or by putting faith in various pundits whose grasp of government finances may be questionable at best. Or of course, those, no doubt well-meaning, individuals who actually believe sufficient growth in the economy will sort this out (and I was once one of them). Even the chief minister accepted that ‘Bob was absolutely right that we face strong headwinds, tricky currents and the occasional Siren song’.
But enough already of the nautical analogies from either of us, the question is still, how do we move the debate forward? A recent Telegraph poll made for depressing reading since it essentially concluded that Britain is more divided than at any time since Brexit. Issues such as taxation, public spending and immigration, along with mistrust in government (and even the BBC) contribute to this to varying degrees right across generational boundaries. Now, I do not suggest that Guernsey is quite so divided, but the thorny issues of trust in government, public finances and how to remedy what is nevertheless, a deteriorating financial picture are clearly evident.
What is patently obvious is that we are going to get nowhere, if we cannot agree on at least one true source of our financial situation. We need to strip out biased political viewpoints, so-called ‘experts’ and a whole raft of armchair or keyboard pundits who frankly have nothing more than opinions (rather than hard facts) to offer. The only consistent source of actual data comes from the Treasury – and it is not coloured by whoever the political grandees happen to be at the time, regardless of what popular tropes may suggest. You may not like their conclusions, but they are not worked out on the back of a fag packet.
The annual accounts are independently audited and, regardless of how opaque they may appear to be to most islanders, or indeed some accountants who have never had to analyse anything other than business accounts, the deteriorating state of our finances is not news and should not be in dispute. But we are not yet anywhere near the calamitous state of the UK’s finances either, largely because we have only one large bond outstanding which might be considered ‘debt’. That remains perfectly manageable, although, since it has been used to provide loan finance to a number of States trading entities, any default could present taxpayers/consumers with a problem. Or, of course, we permit our annual revenues to continually deliver very little or regularly nothing towards replenishing our dwindling reserves, which we have been dipping into since around the crash of 2008 (and zero-10).
The bond may be a tangible debt, but it belies the current and more important future ‘social debt’ occasioned by islanders’ expectations over the rapidly growing provisions for secondary health and long-term care and rising pension commitments occasioned by an ageing demographic. Let alone all of the other ‘entitlements’ that now seem to be considered a right by many.
What’s to be done? Well, for a start, I would caution having a debate this month which seeks to largely rubber-stamp commitments to future infrastructure spend in advance of knowing whether there is going to be any serious change in taxation or government spending. That is not just my own Scottish heritage influencing my advice – that comes straight from the school of Micawber economics as very sage words to avoid the workhouse and penury. For we really only have two choices now: increase the burden of taxation (and someone is going to have to pay more), or reduce the cost of what that taxation pays for and cut government spending.
We can argue till the Guernsey cows come home about what is fair, how much money is wasted or whether we should be spending £61m. a year on income support, but if we do not prioritise our finances, we are going to have a serious problem and you can bet the farm on that (note the switch from pessimistic nautical analogy to optimistic land management).
On top of which, I doubt I am alone in having serious misgivings about how dependable we can now be on the outside world remaining in the post WWII order of international relations that we have come to believe was permanent. We already have the war in Ukraine in Europe and now we have a serious escalation in the Middle East which is likely to have considerable international ramifications for energy and food costs, let alone global security and economic uncertainty.
I have no crystal ball which shows what will be, but it does not take a wizard to recognise that, for the time being at least, we should not be rushing into future infrastructure commitments that will essentially remove our reserves entirely unless substantial changes are agreed to income and/or expenditure this summer.
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